The Great Depression was synchronous, comprehensive and involved all sectors of world economies. In fact, it was the world economic crisis, but it was called in such a way because of the emotional state in which society was. People really plunged into a state of depressive stupor.
The Great Depression of 1929 in the United States occurred as a result of overproduction and a lack of money for the purchase of most goods. Since the money was connected to gold, and the number of the metal was limited, there was a shortage of money, and then the lack of effective demand for goods and services. Then there was a sharp drop in prices (deflation) for goods, bankruptcy of enterprises, unemployment, fencing duties on imported goods, falling consumer demand and a sharp drop in living standards.
The beginning of the Great Depression in the U.S. was October 29, 1929, the so-called “Black Tuesday”. The stock market collapsed, the day shares fell by 10 billion dollars, which meant the disappearance of credit money in the amount of 10 billion dollars. Because of the falling stock market, 20-25 million people in the U.S. had losses (Gunderson 2004).
There is another point of view about the causes of the Great American Depression. Great Depression was preceded by rapid growth of the U.S. economy. Thus, from 1917 to 1927 the U.S. national income has increased almost 3 times.
The Conveyor production was used widely, stock market was developing rapidly, the number of speculative transactions was increasing, and the real estate was becoming expensive. The increase in production of goods demanded increasing money supply, and the dollar was pegged to gold (Cravens 2009).
Before the Great Depression, the U.S. gold reserves were not increasing as rapidly as the economy expanded. This fact led to the emergence of hidden inflation as the government printed new money for the rapid growth of the economy. Thus, the dollar was undermined security in gold, the budget deficit grew, and the FED was lowering the discount rate.
There was a situation when the productivity growth in industry has declined, and the number of pseudo money (bills, receipts, etc.), on the contrary increased. This imbalance in the economy led to the “Black Tuesday” of 1929.
The conditions of living of people were terrible. People didn’t have enough money for living, because they didn’t have jobs. It is nearly impossible to learn the truth about the human losses during the Great Depression, but it makes no sense to deny that such a serious crisis led to a rise in mortality. After the peak of the crisis, more than 17 million people were unemployed and all who had deposits in U.S. banks lost money, the social insurance system at that time did not exist. According to statistics, the level of suicide has increased over the years from 14 to 17 cases per 100 000 people. Several times the authorities of New York even arranged to extreme measures, and handed out free soup on the street.
Unemployment during the Great Depression was hard, and this led to the loss of millions of jobs in the industrialized world. Life during the Great Depression was difficult for financial investors, business firms and industries that were drowned in debt and suffered monumental losses of trade. Bankruptcy of banks has become the norm; many banks were closed due to the inability to earn money.
According to the U.S. Bureau of Labor Statistics, the unemployment of the Great Depression, the level, without alternative sources of employment and strong deflation was very variable. The unemployment of the Great Depression varied between 3.3% and 24.9%!
After the official end of World War One in 1919, the federal government was able to take better control of the U.S. economy and the unemployment rate remained stable at 3.3% for about 7 years from 1923 to 1929 (Uys 2003).
The Government of Herbert Hoover during the Great Depression did not have options out of the crisis and was criticized for failing to stop the economic crisis. The unemployment in the last years of the Great Depression, in 1931, 1932 and 1933 was 15.9%, 23.6% and 24.9%! The peak of the level of unemployment of the Great Depression in 1933, when it reached 24.9%, is one of the highest ever in U.S. history.